A slump in the nonfungible tokens (NFT) market is increasing tension between traders and creators, as top NFT exchanges Blur and OpenSea cut royalty rates for artists, Bloomberg reported on Friday.
In an effort to lower costs meant to uplift the buying and selling of NFTs, the two companies cut royalties for artists when their NFTs’ ownership changes. The loss of income, however, could have adverse impact on the creation of new works.
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This news comes as NFT trading volumes have already fallen by 97 percent, from $17.2 billion in January 2022. Last month, auction houses Sotheby’s and Phillips saw staffing cuts amid a softening art market.
Between August 2021 and May 2022, Nansen data showed that cumulative monthly royalties reached $1.5 billion with a peak of $269 million in January 2022. Last month, royalties totalled a mere $4.3 million.
The NFT platform Blur launched last October, offering a zero-fee marketplace which it opened would incentivize trading. Bloomberg reported that the platform now holds over 70 percent of daily NFT trading volume on Ethereum, and is thus forcing other exchanges to follow its example.
It’s unclear how this will impact the creation of and market for NFTs.
Source: artnews.com